The Federal Reserve's favored inflation indicator is about to be released! The month-on-month increase in core PCE for May is expected to remain moderate

Zhitong
2025.06.27 07:38
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The core PCE price index favored by the Federal Reserve will be released on Friday, with economists expecting a 0.1% month-on-month increase in the core PCE for May, the same as the previous value; the overall PCE month-on-month increase is also expected to remain unchanged. Year-on-year, the core PCE is expected to rise by 2.6%, while the overall PCE is expected to rise by 2.3%. In addition, the month-on-month increases in personal spending and income are expected to be 0.2% and 0.3%, respectively. Analysts point out that inflation in the service sector may continue to soften, and fluctuations in used car prices will still exist

According to the Zhitong Finance APP, the inflation indicator favored by the Federal Reserve—the core PCE price index—will be released at 20:30 Beijing time on Friday. Although the month-on-month increase in the U.S. core PCE price index and overall PCE price index for May is expected to remain at the same level as April, the year-on-year increase for both indicators is expected to widen. Economists generally expect that the core PCE price index for May, excluding the volatile prices of energy and food, will rise by 0.1% month-on-month, the same as the previous value; the month-on-month increase in the overall PCE price index for May is also expected to remain at 0.1%. However, the core PCE price index for May is expected to rise by 2.6% year-on-year, up from 2.5% in April; the overall PCE price index for May is expected to rise by 2.3% year-on-year, up from 2.1% in April.

At the same time, the data released on Friday will also provide more information about consumer spending and income growth. U.S. personal spending for May is expected to increase by 0.2% month-on-month, the same as the previous value; U.S. personal income for May is expected to increase by 0.3% month-on-month, a slowdown from 0.8% in April.

Citigroup analyst Veronica Clark predicts that the month-on-month increase in the U.S. core PCE for May will be 0.14%. She predicts that the report will show that inflation in the service sector continues to soften, as the "significant slowdown" in single-family home rents reported by Zillow indicates a downside risk for housing inflation this year.

Citigroup expects that used car prices will remain volatile in the coming months. Veronica Clark noted that the Manheim used car price index rose by 1.7% in the first half of June, following a 1.4% decline in May and a 2.8% increase in April. She wrote in a report to clients: "Since the Manheim index reflects wholesale prices, it may show the overall upward trend in car prices earlier than other indicators. The significant increase in new car prices may prompt consumers to turn to the used car market."

Evercore ISI analyst Stan Shipley also stated in a recent report: "From an inflation perspective, the relevant components of the CPI and PPI indicate that the core PCE deflator for May rose by +0.15%. Tariffs are coming, but have not yet pushed prices higher."

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